A blog by Luke Akehurst about politics, elections, and the Labour Party - With subtitles for the Hard of Left.
Just for the record: all the views expressed here are entirely personal and do not necessarily represent the positions of any organisations I am a member of.

Wednesday, March 24, 2010

The Tories and Debt

Once again during the Budget Debate David Cameron has focused on debt levels. He keeps saying that the UK has an extraordinary debt level.

Some perspective on this lie is provided by the fact that we entered the recession with the second lowest level of debt of any of the G7 countries.

OECD figures for the calendar year 2009 give general government net financial liabilities as a percentage of GDP as:

This is a result of the prudent early decisions of Tony Blair and Gordon Brown, including using the £20 billion plus windfall from the G3 mobile phone spectrum auction for debt repayments. This contrasts with the Tories squandering of privatisation receipts when John Major managed to double the National Debt in five years in a far more benign world economic environment.

John Spellar MP and Michael Dugher (then the AEEU's economist, now the newly selected Labour PPC for Barnsley East) wrote a useful pamphlet at the time demolishing the myth of a ‘golden legacy’ from the Tories, a myth still propagated by Ken Clarke for obvious reasons. The pamphlet – ‘Fools Gold’ can be found at: http://www.labourlist.org/uploads/aebf61e9-d9db-d194-fd31-b1c865911cbe.pdf

8 Comments:

We have too much debt but when you consider that we have just bailed out the financial system is anyone really that shocked.

At the moment there is very little we can do other than plan to recover this money over a long time. Hopefully MPs will realise there best way to do this is to tax the financial sector.

If the tories plan on cutting back immediately then most of us will probably end up out of work. With even less people working and paying taxes then the debt problem will get worse.

The public sector accounts for about 50% of the economy. At the moment there are few signs that private enterprise is willing to change that. If the public sector was to be cut by 30% as the tories want then it will leave a huge void in the economy.

People on benefits are non productive and if there is no work in the private sector then we are into long term unemployment.

Whilst I'm afraid Britain is set to be on the hook for a good deal more than 47% of GDP I will nevertheless admit to having recently developed a sneaking admiration for Alistair Darling! Yes I know, I know, you don't all have to jeer at once, but it's just that I can't help remembering that when Hank Paulson rang him up in Sept 08 and said 'hey you Brits, you're picking up the tab for this whole Lehman Brothers thing for us right?' Darling had the good grace to tell him where he could stick it - ending the phone call with the immortal line 'No I'm not importing your cancer Hank'. If Darling hadn't stood his ground we'd be looking at national bankruptcy for real with net liabilities now clocking in at 170% of GDP and rising. Nice one Darling! It's a shame you weren't in charge when the Americans rang us before with that invite to join them in the Iraq War.

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About Me

Labour Party activist since 1988 - firmly on the moderate wing of the party. Member of Labour’s NEC 2010-2012. National Secretary of Labour Students 1995-6. Parliamentary candidate for Aldershot (2001) and Castle Point (2005). Hackney Councillor (Chatham Ward) 2002-2014, Labour Group Chief Whip 2002-09, Chair of Health Scrutiny 2010-2014. Supporter of Europe, NATO/nuclear deterrence, Israel, electoral reform. Guardian reader. Dad. Oxford resident. Unite union member. Employment history as a Labour Party Organiser, Local Government Political Assistant, Director at a Public Affairs company. All views expressed in a personal capacity. The rest will become evident from reading the blog.